Save the Dream :
Ohio's Foreclosure Prevention Effort
Types of Credit Repair Scams
Common Credit Repair Scams:
Getting a New Social Security Number: Individuals are only permitted
to have one Social Security number. It is against the law to use a different Social
Security number to create a false identity.
Getting a Federal Employer Identification Number (EIN or FEIN):
Proponents of this scam claim that you can obtain a federal tax
ID number, as if you are a business, then receive a clean credit record under that tax
ID number. It is against the law to use an EIN to set up a false identity. Further,
a new credit report under an EIN will not show any credit history. It is unlikely
that a creditor would regard a new business with no credit history as a good credit
risk.
Challenging Every Negative Entry on a Credit History: As a general
rule, it is lawful for credit agencies to keep accurate records of negative entries
on your credit history for up to seven years, and to keep records of any bankruptcies
for up to 10 years. There are certain circumstances where truthful negative information
may be reported beyond those time periods. As much as you do not like having negative
information on your credit report, your ability to object to inaccurate information
is not meant to be a license to harass honest creditors in an effort to remove accurate
negative entries.
Be aware that the only ones who can permanently remove the debt from your record
are the credit bureau or the creditor.
- No one can erase negative information if it’s accurate. Only incorrect
information can be removed. Accurate information stays on your record for seven
years
from the time it’s reported (10 years for bankruptcy). Even information about bills
you fell behind - on but now are paid - will remain on your report for these time periods.
- Credit repair services can’t ask for payment until they’ve kept their promises.
Federal law also requires credit repair services to give you an explanation of your
legal rights, a detailed written contract, and three days to cancel. This applies
to for-profit services - not to non-profit organizations, financial institutions,
or the creditors.
- Be cautious about e-mails for credit services. Many unsolicited e-mails
are fraudulent and should be deleted.
- You can correct mistakes on your credit report yourself. If you
were recently denied credit because of information in your credit report, you have
the right to request a free copy. It doesn’t cost anything to question or dispute
items in your report. Follow the instructions provided by the credit bureau. The
major credit bureaus are: Equifax, 800- 685-1111, www.equifax.com;
Experian, 800-682-7654, www.experian.com; and TransUnion,
800-916-8800, www.transunion.com. Contact all three,
as the information each has may vary.
- You can add an explanation to your report. If there is a good reason
why you weren’t able to pay bills on time (job loss, sudden illness, etc.) or you
refused to pay for something because of a legitimate dispute, give the credit bureau
a short statement to include in your file.
- Know that you can’t create a second credit file. Fraudulent companies
sometimes offer to provide consumers with different tax identification or social
security numbers in order to create a new credit file. This practice, called "file
segregation," is illegal, and it doesn’t work.
- If you have credit problems, get counseling. Your local
Consumer Credit Counseling Service (CCCS) can provide advice about how to build
a good credit record. The CCCS may also be able to make payment plans with your
creditors if you’ve fallen behind. These services are offered for free or at a very
low cost.
Source: National Fraud Information Center